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The smile hides the pain-US stocks post gains today but losses for week as trade tensions fuel risk-off

May 24, 2019

 

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Market data as of 12:30 pm EST

US Market Snapshot

Global Consumer Stocks Trending in the News

  • Amazon (AMZN) shares could be worth $3,000 according to a new report from Piper Jaffray.  Amazon could reach that level in two to three years, which would be a 65% rise from current levels, the report notes.  Amazon could reach this level without any acquisition and at that level, its market cap would approach $1.5 trillion.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Big Lots (BIG) was downgraded to neutral from overweight at Piper Jaffray.  Big Lots’ price target was slashed to $31 from $44 as well.   Big Lots imports 21% of the merchandise it sells from China and the ongoing tariffs will hurt profitability.  Big Lots is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Casino (ENXTPA:CO) and parent company Rallye (ENXTPA:RAL) were placed under credit protection as both struggle under an enormous debt load.  Credit protection is a feature of French law allowing a company 6 months to present a restructuring plan.  Shares of both were suspended Thursday as the news was published and will resume trading Friday.  Casino is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  Rallye is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas
  • Constellation Brands (STZ) was downgraded at Morgan Stanley today to equal weight from overweight.   Constellation Brands saw its price target cut to $220 from $230 at the same time.  The risk-reward for the stock has tilted away from its favor at this point and better options exist at this point.  Constellation Brands is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.  
  • Foot Locker (FL) reported first quarter adjusted earnings and same store sales that missed consensus.  Foot Locker first quarter adjusted EPS of $1.53 trailed consensus of $1.60.  Same store sales grew 4.6%, also trailing consensus of 5.5%.  Foot Locker first quarter revenue of $2.08 billion came in line with $2.11 billion consensus.  Foot Locker is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Natura (NATU3) was placed on “negative watch” by Fitch ratings after announcing it will acquire Avon Products (AVP).  Avon Products came to a final agreement with Brazil’s Natura (NATU3) that will see it acquired in a deal valued at more than $2 billion.  Fitch is concerned that the combined entity will be very exposed to the declining direct sales business.  Natura previously acquired The Body Shoppe chain.  Natura is rated “Attractive” in our Brazil All-Cap Global Top Stock Ideas.
  • Nissan Motor (TSE:7201) had its credit rating cut by Moody’s.  Nissan’s rating was cut to A3 from A2, with Moody’s cited dropping profit and margins over the last 2 years.  The downgrade comes in the wake of Nissan being placed in credit watch in February.  Nissan is suffering from slumping sales in the US and recently cut its guidance for the year.  Nissan Motor Co. is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas.
  • Tesla (TSLA) shares continue to slide as the downgrades pile up.  Earlier in the week, Morgan Stanley gave a bear case scenario for Tesla that included a $10 price target.  Its previous bear case target was $97.  A number of other brokers have downgraded or written negative comments since, and the stock is down over 7% just this week.  Weak demand, saturated market, insufficient capital and a flood of competing models about to hit the market are among the concerns cited.  Tesla is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Twitter (TWTR) has banned well-known anti-Trump members Brian and Ed Krassenstein.  Twitter permanently banned both of them, saying they operated fake accounts and paid for fake interactions.  A Twitter spokesman said “Twitter rules apply to everyone” adding that the allegations are grounds for the ban.  Twitter is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas    
  • Yum! Brands (YUM) is planning a large expansion of its Taco Bell unit in India as it seeks new avenues of growth.  Taco Bell will add 600 location over the next decade.  Yum Brands has 35 Taco Bells in India today.   The expansion in India will help Taco Bell grow from 7,500 location today to 9,000 by 2022.  Yum Brands is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  

Global Information Technology Stocks Trending in the News

  • Alibaba (BABA) was added to Stifel’s “Stifel Select List” with analysts there calling it cheap after the recent pullback.  Stifel said Alibaba “is even cheaper on earnings from the company’s core marketplace-based businesses.”  Alibaba is rated “Top Buy” in our China All-Cap Global Top Stock Ideas.
  • Facebook (FB) removed a record 2.2 billion fake account in the first quarter of 2019.  For comparison, in the fourth quarter of 2018, Facebook removed just over 1 billion.  The accounts removed are done so as soon as they are created so they are not captured in official new accounts statistics.  Facebook is making a concerted effort to remove fake accounts as it comes under growing criticism.  Facebook is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas
  • Microsoft (MSFT) removed Huawei products from its Azure products website.  The move by Microsoft comes a week after the US government moved to ban Huawei from the US tech sector.  Huawei made a number of products for Microsoft’s Azure Stack products and all have been removed from their catalog.  Microsoft has not commented on other moves it will make in relation to the Huawei ban.  Microsoft is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas
  • Spire Inc (SR) was downgraded today to market perform from outperform at Wells Fargo Securities  Spire saw its price target of $92 maintained.  With Spire’s recent move higher, the risk/reward scenario at these level is not attractive, hence the downgrade.  Any pullback in the stock could be reason to review the rating.  Spire is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • Maersk (CPSE:MAERSK B) said its guidance is subject to “considerable uncertainties” in the face of the ongoing trade hostilities.  Maersk said it still expects ebitda of about $5 billion while consensus is $5.5 billion.  Maersk expects its volume growth to be in line with the market at 1-3%.  Maersk said it has seen a decline in volume in the Pacific and said that could worsen with more tariffs.  Maersk is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.

Global Healthcare Stocks Trending in the News

  • Centene (CNC) now has Third Point as a major shareholder.  Activist investor Third Point has a position worth $300 million, according to Bloomberg report.    The report adds that Third Point thinks that Centene should explore a sale of itself.  There are 2 other activist funds with positions in Centene that support the Third Point position.  Centene is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas 

 

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US Treasuries

  • US 2-Year Treasury Notes are lower with yields up 1.81 basis points to 2.16%
  • US 5-Year Treasury Bonds are lower with yields up 0.64 basis points to 2.12%
  • US 10-Year Treasury Bonds are lower with yields up 0.17 basis points to 2.32%
  • The US Treasury 2s-5s Spread has narrowed 1.17 basis points to -0.04%
  • The US Treasury 2s-10s Spread has narrowed 1.64 basis points to 0.16%
  • US Treasury 5s-10s Spread has narrowed 0.47 basis points to 0.2%

Currencies

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Commodities

  • WTI Crude is up 1.25% to USD$58.43/bbl with the Brent-WTI spread up USD$0.89 to USD$10.73/bbl
  • Gold is little changed 0.1% to USD$1284.67/oz
     

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

S&P 500 Sector ETFs - Intraday

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

Russell 1000 Factor ETFs - Intraday

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

 

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S&P 500 Movers

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Outperformers Sector Price 1D % Chg Volume
Total System Services Inc Information Technology 84.7 13.88%                827,831
Intuit Inc Information Technology 210 6.70%                809,613
CenturyLink Inc Communication Services 16.2 4.66%            2,820,538
HP Inc Information Technology 21 4.38%            2,842,250
Global Payments Inc Information Technology 112 3.70%                463,897
 
Underperformers Sector Price 1D % Chg Volume
Foot Locker Inc Consumer Discretionary 57.2 -15.96%            2,683,656
Autodesk Inc Information Technology 136 -4.91%            1,711,587
Baker Hughes a GE Co Energy 23 -3.69%                918,354
Constellation Brands Inc Consumer Staples 160 -3.65%                474,704
QUALCOMM Inc Information Technology 55.8 -3.00%            5,511,290

 

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